Question

How economic theories are developed through deductive method?

Answer 1

economic theories are developed through deductive method are:

(a) Perception of the problem to be enquired into;

(b) Defining precisely the technical terms and making appropriate assumptions, often called postulates or premises;

(c) Deducing hypotheses, that is, deriving conclu­sions from the premises through the process of logical reasoning; and

(d) Testing of hypothesis deduced.

Answer 2

${\huge {\mathfrak {Answer :-}}}$

➡️ The main steps involved in deductive logic are as under:

(i) Perception of the problem to be inquired into: In the process of deriving economic generalizations, the analyst must have a clear and precise idea of the problem to be inquired into.

(ii) Defining of terms: The next step in this direction is to define clearly the technical terms used analysis. Further, assumptions made for a theory should also be precise.

(iii) Deducing hypothesis from the assumptions: The third step in deriving generalizations is deducing hypothesis from the assumptions taken.

(iv) Testing of hypothesis: Before establishing laws or generalizations, hypothesis should be verified through direct observations of events in the rear world and through statistical methods. (Their inverse relationship between price and quantity demanded of a good is a well established generalization).

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